Oil prices edged up on Friday as both U.S. crude production and inventories declined, pointing towards a tightening market.
With the Organization of the Petroleum Exporting Countries (OPEC) leading a production cut, analysts said that global oil markets were on a path to rebalancing after years of oversupply.
U.S. West Texas Intermediate (WTI) crude futures
U.S. crude inventories
Crude production slipped 81,000 barrels per day (bpd) to 9.48 million bpd, its first fall since the week to Sept. 1.
In international markets, Brent crude futures
"The rebalancing of the oil market has made significant progress over this time, although there is still some way to go to get back to the five-year average," said William O`Loughlin, investment analyst at Australia`s Rivkin Securities.
Bernstein Research said that it expected fuel inventories to continue falling this year.
However, the analysts said that OPEC would need to extend its production cuts beyond the current expiry date at the end of March 2018 to further reduce excess stocks.
"OPEC will not achieve normalized inventory levels before cuts expire at the end of March," Bernstein said, but added that "we believe an extension of cuts through 2018 should allow inventories to reach normalized levels before the end of 2018."
OPEC, together with other producers including Russia has been restraining their output since the start of the year. The pact to cut production is set to expire by the end of March 2018, but there are discussions for an extension.
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